Entering the Canadian housing market as a first-time home buyer in 2025 presents both opportunities and challenges. With various programs, grants, and tax incentives available, understanding these options can significantly ease the financial burden of purchasing your first home. Below is a comprehensive guide to the key initiatives you should be aware of.
1. Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. This amount was increased from $35,000 in April 2024. Withdrawn funds must be repaid into the RRSP within 15 years to avoid tax penalties. TD Bank+6Government of Canada+6NerdWallet: Finance smarter+6RE/MAX Wealth+1Blueprint Financial+1
Eligibility Criteria:
- Must be a first-time home buyer.
- The RRSP funds must have been in the account for at least 90 days before withdrawal.RBC Royal Bank+1Ratehub.ca+1
- A written agreement to buy or build a qualifying home is required.National Bank+2RBC Royal Bank+2Government of Canada+2
2. First Home Savings Account (FHSA)
Introduced in 2023, the First Home Savings Account (FHSA) is a registered plan that allows prospective first-time home buyers to save up to $8,000 annually, with a lifetime contribution limit of $40,000. Contributions are tax-deductible, and withdrawals for the purpose of purchasing a first home are tax-free. TD Bank+2Ratehub.ca+2National Bank+2
Key Features:
- Combines benefits of both RRSPs and Tax-Free Savings Accounts (TFSAs).
- Unused contribution room can be carried forward to subsequent years.National Bank+1National Bank+1
- Both partners in a couple can have separate FHSAs, effectively doubling the savings potential.Blueprint Financial+4RE/MAX Wealth+4Ratehub.ca+4
3. Tax Credits and Rebates
- Home Buyers’ Tax Credit (HBTC): First-time home buyers can claim a non-refundable tax credit of up to $1,500 when purchasing a qualifying home. TD Bank
- GST/HST New Housing Rebate: If you purchase a new or substantially renovated home, you may be eligible for a rebate on part of the GST or HST paid. TD Bank
4. Provincial and Municipal Programs
Various provinces and municipalities offer additional incentives:
- Ontario: First-time buyers may receive a land transfer tax refund of up to $4,000. auxiliummortgage.com+1WOWA+1
- British Columbia: Offers a Property Transfer Tax (PTT) exemption for qualifying first-time home buyers on homes valued up to $525,000, with partial exemptions for homes up to $600,000. auxiliummortgage.com
- Nova Scotia: The Down Payment Assistance Program (DPAP) provides eligible first-time buyers with an interest-free loan of up to 5% of the purchase price, capped at $25,000, to assist with the down payment. Government of Nova Scotia
5. Extended Mortgage Amortization and Increased Insured Mortgage Cap
In September 2024, the Canadian government introduced changes to mortgage rules to address housing affordability:Reuters
- Extended Amortization Period: First-time home buyers and purchasers of newly built homes can now opt for a 30-year mortgage amortization period, up from the previous 25 years. This extension aims to reduce monthly mortgage payments.
- Increased Insured Mortgage Cap: The cap on insured mortgages has been raised from $1 million to $1.5 million, allowing more buyers to qualify for mortgage insurance with a minimum 5% down payment. Reuters+1auxiliummortgage.com+1
Final Thoughts
Navigating the array of programs and incentives available can be complex, but leveraging these opportunities can make homeownership more attainable for first-time buyers in Canada. It’s advisable to consult with financial advisors or mortgage professionals to fully understand eligibility requirements and to develop a strategy tailored to your financial situation.
References
Government of Canada. (n.d.). The Home Buyers’ Plan. Retrieved April 1, 2025, from https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html
RE/MAX Wealth. (2025). Government Incentives for Homebuyers in 2025: What Programs Are Available. Retrieved April 1, 2025, from https://www.remaxwealth.com/insights/government-incentives-for-homebuyers-in-2025-what-programs-are-available
Ratehub.ca. (n.d.). First-Time Home Buyer Programs in Canada 2025. Retrieved April 1, 2025, from https://www.ratehub.ca/first-time-home-buyer-programs
National Bank. (2024). Grants and Incentives for First-Time Home Buyers. Retrieved April 1, 2025, from https://www.nbc.ca/personal/advice/home/grants-incentives-purchasing-new-home.html
Reuters. (2024). Canada Relaxes Some Mortgage Rules to Tackle Housing Crisis. Retrieved April 1, 2025, from https://www.reuters.com/world/americas/canada-relaxes-some-mortgage-rules-tackle-housing-crisis-2024-09-16/
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